Professor Robert McClelland, dean of Business at RMIT Vietnam, speaks at the Global Business Forum 2025 in HCM City on Wednesday. VNA/VNS Photo

HCM CITY — Việt Nam is standing at a decisive turning point in its foreign direct investment (FDI) journey, drawing unprecedented attention from global investors at a time when capital flows worldwide are seeking fresh destinations.

In the first half of 2025, the country attracted more than US$21.5 billion in FDI, the highest mid-year figure since 2009 and a striking contrast to the global decline in FDI flows.

This surge reflects both Việt Nam’s growing integration into global supply chains and its evolving position as a destination that is no longer competing merely on costs but increasingly on innovation and sustainability.

At the same time, Việt Nam’s national brand value has climbed steadily, and is now ranked 32nd worldwide by Brand Finance – up from 47th just a decade ago.

At the Global Business Forum 2025, jointly held in HCM City on Wednesday by RMIT University Việt Nam and the Southern Investment Promotion, Information and Support Centre (SIPISC) under the Ministry of Finance, the debate was not about whether Việt Nam is attracting FDI but about what kind of FDI the nation should seek for the future.

Shifting from cost advantage to innovation-led growth

Professor Robert McClelland, dean of Business at RMIT Việt Nam, highlighted that FDI inflows in the first six months of 2025 rose 32.6 per cent year-on-year, mainly channelled into manufacturing, real estate, green technology, and scientific research.

“This momentum is reinforcing Việt Nam’s role as an emerging hub for innovation and sustainable growth in the region,” he said.

Yet, McClelland stressed that Việt Nam has reached a critical inflection point. For decades, the country’s appeal rested on competitive labour costs and favourable market access through free trade agreements. That model, while still valuable, is giving way to a new era where success hinges on digital transformation, renewable energy, and research-driven industries.

“Recent years have seen strong rises in foreign investment in renewable energy, high-tech manufacturing, and digital services. These sectors do more than generate profits, they foster inclusive and sustainable growth,” he observed.

Strategic priorities for FDI

According to Trần Thị Hải Yến, director of SIPISC, Việt Nam is prioritising investment in six key areas: electronics and semiconductors; renewable energy; research and innovation centres; digital economy and digital transformation; high-quality agriculture; and international financial hubs.

To direct FDI into these areas, the government has rolled out the Foreign Investment Cooperation Strategy 2021–2030, with a strong emphasis on project quality.

Alongside institutional reforms and investment incentives, Việt Nam is setting up dedicated support funds, promoting international financial hubs, and expanding infrastructure in transport and energy to provide a stronger backbone for foreign enterprises.

The country has already witnessed early successes.

In the semiconductor industry, large-scale projects from South Korea and the United States have established Việt Nam as a growing link in the global chip supply chain.

In renewable energy, foreign-backed wind and solar projects in Bình Thuận, Ninh Thuận and the Mekong Delta are expanding capacity while contributing to the government’s green growth targets.

Delegates attend the Global Business Forum 2025. — VNA/VNS Photo

Investors eye both export potential and domestic market

For investors, Việt Nam offers a unique dual opportunity: access to global markets via its extensive free trade agreements, and a rapidly expanding domestic market of over 100 million people.

Alexander Ziehe, chairman of the German Business Association in Việt Nam, praised the reforms to infrastructure and transparency.

“We believe these efforts will further enhance Việt Nam’s appeal for high-quality, long-term FDI, especially in fields where German companies have strengths,” he said.

Germany’s interest is not limited to manufacturing for export. German businesses are also targeting Việt Nam’s domestic consumer base, which is increasingly demanding premium goods and services.

“Our country shares Việt Nam’s commitment to green growth and digital transformation. We look forward to partnering with Việt Nam in this journey,” Ziehe affirmed.

Japanese companies, long-time investors in Việt Nam, are likewise shifting from traditional assembly operations to higher value-added activities.

Recent Japanese investments have included advanced automotive components, smart city projects, and high-quality healthcare services, reflecting Việt Nam’s evolution as more than just a low-cost production base.

Meanwhile, South Korean conglomerates continue to anchor their regional supply chains in Việt Nam, with expansions in electronics, e-mobility, and battery manufacturing.

Despite the positive momentum, experts caution that Việt Nam must accelerate reforms to convert registered capital into realised investment.

Dr Đặng Thảo Quyên, senior programme manager for International Business at RMIT Vietnam, pointed out that the persistent gap between pledged and disbursed capital highlights the need for faster project implementation.

“Administrative simplification, stronger public–private partnerships and better project monitoring are essential to ensure that committed investment is turned into tangible economic benefits,” she said.

The Ministry of Planning and Investment has also emphasised the importance of human capital.

As FDI projects increasingly demand high-skilled workers, Việt Nam faces mounting pressure to upgrade vocational training and higher education.

Programmes linking universities with foreign enterprises are being expanded to align workforce skills with the needs of investors.

Infrastructure remains another critical bottleneck. While Việt Nam has made significant progress in highways, ports and airports, congestion in major hubs like HCM City and Hải Phòng still affects logistics costs.

Energy infrastructure, particularly stable electricity supply, is also a pressing concern for both manufacturers and data centre operators.

Competing in a regional race

Việt Nam is not alone in its quest for high-quality FDI. Neighbours such as Indonesia, Thailand and Malaysia are also pushing reforms and incentives to attract capital into green technology, semiconductors and the digital economy.

Experts say Việt Nam’s advantage lies in its political stability, strategic trade agreements and proactive reform agenda, but competition will intensify.

To sustain its momentum, Việt Nam must balance openness to investors with stronger safeguards for the environment and communities.

Recent debates over renewable projects in the Mekong Delta highlight the need to align economic growth with climate resilience.

Ultimately, the challenge is not simply to attract more FDI but to attract the right kind of FDI.

Quyên stressed: “The next step is not only to attract capital but to guide it into sectors that generate sustainable, inclusive and transformative outcomes. We have captured the world’s attention. Now is the time to build and maintain trust.”

The record $21.5 billion inflows in the first half of 2025 signal Việt Nam’s rise as a global investment destination. But the true test lies ahead – whether the country can channel this momentum into innovation-driven, green and inclusive growth, ensuring that today’s opportunities translate into tomorrow’s resilience.  VNS